A tax plan only a one percenter could love

In this July 31, 2015 file photograph, U.S. presidential contender Donald Trump drives his golf buggy past his helicopter during the second day of the Women’s British Open golf championship on his Turnberry golf course in Turnberry, Scotland. | Scott Heppell / AP

After the failed effort to repeal the Affordable Care Act (aka Obamacare), the Trump administration has set its sights on its next big project: so-called “tax reform.”

And the “reform” they seek appears guaranteed to elicit disdain from all sides – with the notable exception of the ultra-wealthy.

Let’s first acknowledge that tax reform is hard. The system is held in place by entrenched interests who don’t want to see their favorite loopholes taken away. That’s a big reason why it’s been over 30 years since the last major tax overhaul, championed by Ronald Reagan in 1986.

Adding to the complexity of tax reform is the fact that all of the White House people working on it are resplendently wealthy.

Treasury Secretary Steven Mnuchin and Trump economic adviser Gary D. Cohn are each worth hundreds of millions. In fact, Trump’s cabinet is the wealthiest in history. That might have something to do with Trump, himself a billionaire, being the wealthiest president in history.

Put simply, the folks making the rules around taxes may not have working families’ interests in the forefront of their minds. Crowding them out are the wishes of the ultra-rich friends they see regularly in their glitzy country clubs and gated communities.

A seminal study by Professors Benjamin Page, Larry Bartels, and Jason Seawright in 2013 showed that the policy preferences of the wealthiest 1 percent are “much more conservative than the American public as a whole” when it comes to “taxation, economic regulation, and especially social welfare programs.”

The top 0.1 percent, those with assets over $40 million, have even more conservative views, the paper points out.

Perhaps unsurprisingly, the study shows, the wishes of the wealthiest citizens are much more likely to make it into public policy than those of the less affluent. One person, one vote be damned.

Every year Gallup puts out the same poll asking people about taxes. Every year they get the same response: Over 60 percent want to see the wealthy pay more in taxes. More than half believe “government should redistribute wealth by taxing the rich.”

Earlier this year, Treasury Secretary Mnuchin seemed to agree. He promised in no uncertain terms that this administration wouldn’t seek to cut taxes for the “upper class.”

Unfortunately, that was a bald-faced, pants-on-fire, inexplicable lie.

Trump’s plan does redistribute wealth, it turns out – but it’s towards greater inequality, not less. It takes serious mental gymnastics to argue that what Trump’s team has proposed on taxes would benefit the average working Joe or Jane.

The plan eliminates the federal estate tax, a levy that only impacts the wealthiest 0.2 percent of heirs and heiresses. It was put in place a hundred years ago with the express goal of reducing inequality and preventing aristocracy.

The plan also cuts the effective tax rates on the wealthiest individuals and most profitable corporations, those doing phenomenally well right now.

This draconian effort would intentionally and literally push working families into the cold, by zeroing out the Low Income Home Energy Assistance Program. If that weren’t savage enough, the administration also wants to cut the Women Infant and Children (WIC) food program that provides nutrition assistance to about half the babies born in this country.

The poor in this country often don’t see themselves as poor, the late author John Steinbeck noted, but as “temporarily embarrassed millionaires.” Maybe that’s why some working class people support this administration.

CONTRIBUTOR

Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies. Josh’s main focus is on addressing wealth inequality through the estate tax, a levy on the intergenerational transfer of immense wealth.